The federal civil False Claims Act (“FCA”) has existed since the Civil War. In more recent years the FCA has been used to combat fraud in the health care industry; however, recent changes have greatly expanded the scope of potential liability. In general, the FCA prohibits the submission of a false claim for reimbursement to the federal government. Amendments to the FCA in 1986 created the concept of a “reverse false claim,” in the words of the statutes, contractors are prohibited from “use[ing]” a false record or statement to “conceal”, “avoid” or “decrease” an obligation to pay the federal government.
The Fraud Enforcement and Recovery Act of 2009 (“FERA”) expanded the reverse false claims provision by extending reverse false claim liability to any person who “knowingly conceals” an overpayment, even if the overpayments were innocently received, or “knowingly and improperly avoids or decreases” an obligation to make a payment to the government. The FERA eliminated the requirement that the improper retention of funds or avoidance of an obligation be effectuated by a false record or statement.
The Patient Protection and Affordable Care Act of 2010 (“PPACA”) took another step toward expanding the reverse false claims provision by defining the phrase “obligation to pay.” The PPACA defines “overpayments” as “any funds that a person receives or retains under [Medicare] or [Medicaid] to which the person… is not entitled…” Further, overpayments must be reported and returned within 60 days of identification. Any overpayments retained after the 60 day period are considered an “obligation” for purposes of the FCA.
While the PPACA has expanded and clarified the reverse false claims provision, many questions remain. What does it mean to “knowingly conceal” or “improperly avoid” an obligation? Is a provider required to take affirmative steps to identify and investigate potential overpayments? For purposes of “identifying” an overpayment, whose knowledge is imputed to the provider? Future case law will no doubt address these questions. However, one thing is clear, the reverse false claim liability is no longer a limited oddity, it is a potential trap for the unwary.